Allegra Spender (Wentworth, Independent) Share this | Hansard source

Ensuring suitable levels of competition in the Australian economy has been something many Australians have taken for granted for a long time, but currently, in a cost-of-living crisis, the issue of competition is front of mind for many of my community. Research conducted by e61 last year showed that Australia was far more prone to higher levels of market concentration compared to our peers, like the United States. And it shows. Currently we have two supermarkets that dominate 70 per cent of the food and grocery market, two airlines that represent 98 per cent of the domestic airline market, four banks representing 75 per cent of the market, four media outlets representing 78 per cent of the market, three telcos operating with 89 per cent of the communications market, three insurers representing 74 per cent of the general insurance market and, as of today, we have two political parties hoping to capture 100 per cent of the vote market.

In fact, the e61 research shows that around seven per cent of all Australian industries had more than 80 per cent of the market share, dominated by four companies or fewer. Compare this to the US, where only one per cent of their industries had that level of concentration. I admit that Australia and the US are different countries and have different market dynamics in different scale. I also acknowledge that, in certain circumstances, economies of scale mean that we do get cheaper products to consumers so there are benefits of bigger companies in certain circumstances, but I think there has never been a more urgent opportunity and urgent need for competition to be a focal point for regulation.

I welcome the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 for its intent to modernise merger reforms and introduce an international best-practice approach for dealing with competition considerations in Australia, but I and others do have concerns about the unintended consequences this bill will have for small and, particularly, young firms. While I'm glad to see there are review provisions in this legislation, we will monitor this legislation closely going forward.

The bill would replace existing merger frameworks with one including mandatory notification. In practice, this puts the onus on companies to disclose ahead of time so that proper consideration can take place, instead of requiring the ACCC to initiate proceedings. The law will specify the M&A proposals that meet one of the notification thresholds that would require mandatory reporting. These notification thresholds cover mergers that represent a combined turnover of the business that is above $200 million; part of a series of mergers of the same or similar goods and services within a three-year period; and any merger involving a very large business with a turnover of more than $500 million buying a business where the acquisition exceeds $10 million. These thresholds will increase the number of mergers the ACCC will need to review and will effectively cover many of the mergers or acquisitions of Australia's largest companies. The Senate reports notes that stakeholders are broadly on board with the proposed changes and that there is broad cross-party support.

While the monitoring of competition impacts of M&A is important, I note that this bill is not without the risk of unintended consequences. These risks particularly affect young firms if the ability to be acquired or merge is impeded or restricted. For young firms an acquisition provides one of the few opportunities for early-stage investors to exit and realise gains on an investment often made several years before. If a merger cannot take place, the investor must wait either for another investor to buy them out or for the company to list publicly. Patient capital is hard to find and getting harder, with banks and superannuation funds effectively holding their nominal investments in small-business and venture flat over the past decade. That's not a good for anyone. Acquisitions also provide good businesses and good ideas the opportunity to scale quickly. It's not always the case that a reduction in acquisition is bad. I note that the Treasurer has agreed to review the thresholds after a period of 12 months, a condition that I warmly welcome.

I also note that the impost of this regulation is of concern for different parts of the economy that I've spoken to, including the property sector and other sectors, which are questioning how they will or should be fitting into this legislation.

As I said I welcome this bill. I think it is appropriate. But I do think we need to get it right. And I do have concerns in particular about the ability of the regulator to meet the additional requirements.

A division having been called in the House of Representatives—

Sitting suspended from 17:21 to 17:56

As I was saying, whilst I welcome a best-practice approach, I do have concerns about the ability of the regulator to meet the additional requirements and their ability to undertake their investigations in a diligent and timely way.

The legislation requires phase 1 determinations to be made within 30 days and phase 2 determinations to be made after 90 days. But, as we've seen with other regulatory organisations, these types of benchmarks are easily skirted and often not met, and I hold the same concerns here, including that stop the clock rights exist for the ACCC as we see for other regulators. Additional requests for information are anecdotally used by regulators to create more time when they've got challenges meeting their deadlines. If this is the case, the legislation has the potential to delay mergers, costing money and resources and placing businesses through additional regulatory hurdles with limited benefit to competition and the community. I encourage the review in 12 months to also consider the responsiveness of the ACCC, to assess that as part of the review and also to assess whether measures like stop the clock or other types of additional information measures are being used in ways that are actually delaying the assessment of these applications.

I'd also like to acknowledge that this bill has undergone a Senate review that made four recommendations in light of these concerns and concerns made by others. In particular, I welcome recommendation 2. In addition to the 12 month review, the Senate report recommended an expert implementation advisory panel to be established which specifically called out the likes of the Tech Council of Australia, that represent many of these young and innovative firms. I think it is absolutely critical that young and innovative firms are represented in this sort of panel of review because it is critical that this legislation really enables competition, innovation and dynamism, and there is a danger that there could be some unintended consequences which, under certain circumstances, may actually dampen that competition, dynamism and creation of new firms. I warmly support that recommendation, and I think it would help the business community be reassured that the unintended consequences of the bill will be taken seriously.

In conclusion, I support this bill because competition is a major concern, and I note that similar models are working effectively in other jurisdictions and have the ability to ensure that Australia continues to be a country with effective and robust business competition. I support this bill because I really want to support young, innovative and small businesses, and I think it's really important that we continue to let those businesses thrive. Part of that is making sure that they have and are able to compete with larger businesses.

However, I identify the risks associated with imposing these different burdens on businesses, including stifling exit opportunities and thus investment, and delaying the process of effective mergers through regulatory bottlenecks. I think an implementation review is a sensible recommendation in addition to the 12-month review of thresholds, and I encourage the government to seriously consider implementing the recommendations of the Senate report.

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